News

Help to Buy hits low-risk borrowers

Safer borrowers have seen their costs rise much faster than their higher-risk neighbours (PA)

THE Help to Buy scheme is having a knock-on effect on borrowers with large deposits, leaving them facing high mortgage costs as lenders withdraw deals and raise rates at a much faster pace than for high-risk customers with 10% deposits.

The number of loans available to homebuyers with a 40% deposit has fallen by 41% from 554 to 329 over the past year, according to analysis by the data firm Moneyfacts for The Sunday Times. Borrowers with 25% deposits have also seen the number of deals tumble by 20% from 840 to 675. However, those looking to borrow 90% of the value of their homes have more choice than at any time over the past six years.

Safer borrowers have also seen their costs soar sharply, rising 2½-times faster than their higher-risk neighbours. The annual cost of borrowing £200,000 on an interest-only, five-year fixed deal has risen by £700 since